Unassociated Document


    THIS
NOTE HEREOF HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS.  THIS NOTE HAS
BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW FOR DISTRIBUTION
OR RESALE, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED UNLESS
IT HAS BEEN SO REGISTERED OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.

     

    CONVERTIBLE PROMISSORY
NOTE

     

    Principal
Amount:  $_______                                                                                                      Issue
Date:  August ___, 2008

     

    FOR VALUE RECEIVED, the
undersigned, Sunburst
Acquisitions III, Inc., a Colorado corporation (the “Borrower”
or the “Company”),
hereby promises to pay to the order of ___________ (together
with each of their said heirs, personal representatives, successors and assigns,
and any such bearer, being hereinafter referred to collectively
as  the “Holder”),
on or before July 31, 2010 (the “Maturity
Date”), the principal sum of ________________________ Dollars
($_____) (this “Note”
or the “Loan”).  For
purposes of this Note, “Borrower” shall mean all successors in interest and
assignees, including, without limitation, pursuant to a merger, consolidation,
reorganization, recapitalization or other similar restructuring event
(collectively, a “Reorganization”),
and all endorsers, sureties and guarantors and any other person liable or to
become liable with respect to the Loan.

    


    1. Additional
Consideration.  In lieu of interest and as additional
consideration for this Note, Borrower shall issue to Holder _____________
(__________) shares of the Borrower’s common stock to be delivered to the Holder
no later than thirty (30) business days after the Issue Date of this
Note.

     

    2. Payment of
Principal.                                           The
Borrower shall pay the Holder any outstanding principal of this Note on the
Maturity Date, provided however that the Borrower may pay the Holder prior to
the Maturity Date in the event of a Subsequent Financing as set forth in Section
3 below or in accordance with Section 4 below.

     

    3. Optional
Conversion.   If upon the closing of the Borrower’s next
equity financing in which the Borrower sells newly-issued shares of its equity
securities or securities convertible into equity securities, of one or more
series (the “Equity Securities”), the Borrower receives gross cash proceeds of
$1,000,000 or more (excluding the conversion of this Note or other similar
convertible notes or other securities) (the “Subsequent Financing”) on or before
the Maturity Date, the Holder may elect to (i) convert the outstanding principal
of this Note into validly issued, fully paid and non-assessable shares of Equity
Securities of the same kind issued in the Subsequent Financing (the “Subsequent
Financing Securities”) at a conversion price equal to 75% of the per share or
unit purchase price of the Subsequent Financing Securities (the “Conversion”),
or (ii) receive payment in cash of the outstanding amount due under this Note
(the “Cash Payment”).  The Holder shall notify the Borrower of its
election to either proceed with the Conversion or the Cash Payment by providing
written notice in the form of Exhibit A to this Note, via electronic mail to a
representative of the Borrower.  If the Holder elects the Conversion,
the Borrower shall issue to the Holder, within ten (10) days following the
closing of the Subsequent Financing, Subsequent Financing Securities that are
identical in all respects to the securities issued by the Company in the
Subsequent Financing and the Holder shall have all the rights and benefits
(including the benefits of any representations and warranties, preemptive
rights, rights of first offer, co-sale rights and other similar rights) accorded
to the purchasers of the Subsequent Financing Securities, except any thereof as
are conditioned upon the holding of a minimum percentage ownership in the
Company. The Borrower shall not issue fractional shares but shall pay to the
Holder in cash the dollar equivalent of any fractional shares on the closing
date of the Subsequent Financing.  However, in the event that the
Company does not have the required number of shares of common stock authorized
to effectuate a conversion as contemplated in this section, then such shares
that are to be issued in accordance with such conversion shall only be issued
upon the Company filing the required Certificate of Amendment to increase the
authorized shares of common stock of the Company.

     

    
      
         

      

      
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    4. Prepayment.  Borrower
shall pay the entire outstanding principal balance under this Note, (the “Indebtedness”),
at anytime, in the Borrower’s sole discretion, on or before the Maturity Date
without penalty.  The Borrower shall give at least a 5 day notice to
the Holder prior to such repayment.

     

    5. Acknowledgement by the
Holder.  The Holder hereby represents and warrants to the
Borrower that the Holder has sufficient knowledge and experience of financial
and business matters so that the Holder is able to evaluate the merits and risks
of purchasing this Note and the Holder has had substantial experience in
previous private and public purchases of securities.  The Holder is an
“accredited investor” as that term is defined in Rule 501 of Regulation D under
the Securities Act.

     

    6. Event of
Default.  Any of the following shall constitute an “Event of
Default” under this Note, and shall give rise to the remedies provided in
Section 6
herein:

     

    
      	
              (a)  

            	
              The
      failure by the Borrower to pay the Indebtedness or otherwise to satisfy
      when due, as contemplated in Section 2, or comply
      with the obligations set forth in  Section
    3;

            


    

     

    
      	
              (b)  

            	
              The
      failure by the Borrower to timely file and keep current periodic reports
      with the SEC;

            


    

     

    
      	
              (c)  

            	
              If
      the Borrower:  (i) makes a general assignment for the
      benefit of creditors; (ii) is adjudicated a bankrupt or insolvent;
      (iii) files a voluntary petition in bankruptcy; (iv) takes advantage,
      as against its creditors, of any bankruptcy law or statute of the United
      States of America or any state or subdivision thereof now or hereafter in
      effect; (v) has a petition or proceeding filed against it under any
      provision of any bankruptcy or insolvency law or statute of the United
      States of America or any state or subdivision thereof, which petition or
      proceeding is not dismissed within 30 days after the date of the
      commencement thereof; (vi) has a receiver, liquidator, trustee,
      custodian, conservator, sequestrator or other such person appointed by any
      court to take charge of its affairs or assets or business and such
      appointment is not vacated or discharged within 30 days thereafter; or
      (vii) takes any action in furtherance of any of the
      foregoing;

            


    

     

    
      	
              (d)  

            	
              Any
      merger, liquidation, dissolution or winding up of the Borrower or its
      business or any sale of all or substantially all of the Borrower’s capital
      stock or assets; provided,
      however,
      the merger or sale of the Borrower with a successor entity that
      acknowledges and expressly assumes in writing the Borrower’s obligations
      hereunder shall not be considered an “Event of Default” for purposes
      hereof; or

            


    

     

    7. Remedies on
Default.  If any Event of Default shall occur and be continuing
for a period of 10 calendar days, the Holder shall, in addition to any and all
other available rights and remedies, have the right, at the Holder’s option
unless such Event of Default shall have been cured or waived in writing by the
Holder (which waiver shall not be deemed to be a waiver of a subsequent
default), to:  (a) declare the entire unpaid principal balance of this
Note, together with all other sums due by the Borrower hereunder (the “Default
Amount”), along with a default premium equal to 10% of the Default Amount, to be
immediately due and payable; and (b) pursue any and all available remedies for
the collection of such principal and other sums to enforce its rights as
described herein; and in such case the Holder may also recover all costs of suit
and other expenses in connection therewith, including reasonable attorney’s fees
for collection and the right to equitable relief (including, but not limited to,
injunctions) to enforce the Holder’s rights as set forth herein.

     

    
      
         

      

      
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    8. Certain
Waivers.  Except as otherwise expressly provided in this Note,
the Borrower hereby waives diligence, demand, presentment for payment, protest,
dishonor, nonpayment and default with respect to the Indebtedness evidenced
hereby.  The Borrower hereby expressly agrees that this Note, or any
payment hereunder, may be extended, modified or subordinated (by forbearance or
otherwise) from time to time, without in any way affecting the liability of the
Borrower.

     

    9. Waivers and Amendments;
Cumulative Remedies.  Neither any provision of this Note nor
any performance hereunder may be waived orally, but only by an agreement in
writing and signed by the party against whom enforcement of any waiver or
discharge is sought.  No right or remedy conferred upon the parties
under this Note is intended to be exclusive of any other right or remedy
contained herein or in any instrument or document delivered in connection
herewith, and every such right or remedy shall be cumulative and shall be in
addition to every other such right or remedy contained herein and/or now or
hereafter existing at law or in equity or otherwise.

     

    10. Governing
Law.  This Note shall be deemed to be a contract made under the
laws of the State of New York and shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the
principles of conflicts of law.  If either party shall commence an
action or proceeding to enforce any provision of this Note, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or
proceeding.

     

    11. Consent to Jurisdiction and
Service of Process.  The Borrower by execution, and the Holder
by acceptance, hereof each consent to the jurisdiction of any federal district
court in the State of New York having competent jurisdiction.  The
Borrower waives personal service of any summons, complaint or other process in
connection with any such action or proceeding and agrees that service thereof
may be made, as the Holder may elect, by certified mail directed to the Borrower
at the location provided for in Section 13 hereof,
or, in the alternative, in any other form or manner permitted by
law.

     

    12. Additional
Documents.  From time to time the Holder will execute and
deliver to the Borrower such additional instruments as the Borrower may
reasonably request to effectuate the purposes of this Note.

     

    13. Notices.  All
notices and other communications required or permitted hereunder shall be in
writing and shall be mailed by United States first-class mail, postage prepaid,
or delivered personally by hand or by nationally recognized overnight courier or
sent via facsimile addressed to:

     

    If to the
Borrower:

    


    Sunburst
Acquisitions III, Inc.

    c/o
Percipio Biotherapeutics

    Attn:
Robert Brooke

    10990
Wilshire Blvd., Suite 1410

    Los
Angeles, CA 90024

    Facsimile:
310.696.0334

    


     

    If to the
Holder:

     

    ______________________

    ______________________

    Facsimile: (310)
696-0334

     

    or at
such other address as shall have been furnished to the other party in
writing.  All such notices and other written communications shall be
effective:  (a) if mailed, five days after mailing; (b) if delivered,
upon delivery; and (c) if sent via facsimile, upon confirmation of
receipt.

     

    
      
         

      

      
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    14. Wiring
Instructions.  Any amount wired to the Borrower hereunder shall
be wired in accordance with the following wiring instructions:

     

    15. Severability.  If
any provision of this Note is prohibited or unenforceable in any jurisdiction,
it shall be ineffective in such jurisdiction only to the extent of such
prohibition or unenforceability, and such prohibition or unenforceability shall
not invalidate the balance of such provision to the extent it is not prohibited
or unenforceable nor the remaining provisions hereof, nor render unenforceable
such provision in any other jurisdiction.

     

    16. Assignment.  This
Note shall inure to the benefit of, and shall be binding upon, the Borrower and
the Holder and their respective successors and permitted
assigns.  Neither party hereto may assign any of its rights or
obligations hereunder without the prior written consent of the other
party.

     

    17. Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument.  A facsimile signature of any party shall be considered to
have the same binding legal effect as an original signature.

     

    18. No Stockholder
Rights.  Nothing contained in this Note shall be construed as
conferring upon the Holder or any other person the right to vote or to consent
or to receive notice as a stockholder in respect of meeting of stockholders for
the election of directors of the Borrower or any other matters or any rights
whatsoever as a stockholder of the Borrower; and no dividends shall be payable
or accrued in respect of this Note.

     

    JURY
WAIVER.  THE BORROWER BY EXECUTION, AND THE HOLDER BY
ACCEPTANCE, HEREOF EACH CONSENT THAT IN ANY CIVIL ACTION, COUNTERCLAIM, OR
PROCEEDING, WHETHER AT LAW OR IN EQUITY, WHICH ARISES OUT OF, CONCERNS, OR
RELATES TO THIS NOTE, ANY AND ALL TRANSACTIONS CONTEMPLATED BY THIS NOTE, THE
PERFORMANCE OF THIS NOTE, OR THE RELATIONSHIP CREATED BY THIS NOTE, WHETHER
SOUNDING IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, TRIAL SHALL BE TO A
COURT OF COMPETENT JURISDICTION AND NOT TO A JURY.  EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY.  ANY
PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS NOTE WITH ANY COURT, AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THIS NOTE OF THE WAIVER OF
THEIR RIGHT TO A TRIAL BY JURY.

     

    
      
         

      

      
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    IN WITNESS WHEREOF, the
undersigned has executed and delivered this Note on and as of the date first set
forth above.

     

     

    
      
        	 	SUNBURST
      ACQUISITIONS III, INC., a Colorado corporation, as
    Borrower	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Scott
      Mac Caughern	 
	 	 	Chief
      Executive Officer	 
	 	 	 	 
	 	 	 	 


      

    

    
:                      


    
      
         

      

      
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    EXHIBIT
A

    


    FORM OF
OPTIONAL CONVERSION NOTICE

    


    Pursuant
to Section 3 under the Convertible Promissory Note issued ___________ by
Sunburst Acquisitions III, Inc., a Colorado corporation (the “Company”), as of the
date written below, the undersigned hereby elects to (please check the
appropriate line):

    


    


    _______
convert the outstanding principal of this Note into validly issued, fully paid
and non-assessable shares of Equity Securities of the same kind issued in the
Subsequent Financing (the “Subsequent Financing Securities”) at a conversion
price equal to 75% of the per share or unit purchase price of the Subsequent
Financing Securities (the “Conversion”),

    


    or

    


    _______
receive payment in cash of the outstanding amount due under this Note (the “Cash
Payment”).

    


    


    If shares
of Common Stock are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith.  No fee will be
charged to the holder for any conversion, except for such transfer taxes, if
any.

     

     

    
      	 	Signature:  	 	 
	 	 	 	 
	 	Name/Entity: 	 	 
	 	 	 	 
	 	Title (if
      applicable):   	 	 
	 	 	 	 
	 	Share Delivery
      Instructions:	 	 
	 	 	 	 


    

    Please include instructions for share
delivery.